Wholesaling Short Sale Properties in Alabama

The short answer

Can you wholesale a short sale property in Alabama?

Yes, you can generally contract on a short sale and assign the contract, but the lender must approve the final price and terms in writing. Never promise a seller that the lender will approve the short sale.

A short sale needs a seller with a hardship, a purchase offer and a lender willing to accept less than the payoff. The lender reviews financials, an appraisal or broker opinion and your offer. Our offer guide shows how to word a contract that is subject to lender approval, and the payoff statement guide explains the starting number.

Alabama’s wholesaling statute, Ala. Code 8-42-2, applies to single-family assignments and calls for written disclosure to the seller and buyer. Short sales add a lender step on top. Ask whether the lender allows assignment or wants a buyer named on the approval. Check our assignment guide and speak to counsel.

The opportunity

Why short sales appear in Alabama

Huntsville saw strong job growth around Redstone Arsenal and Cummings Research Park, and prices rose faster than many wages. Owners who bought late or borrowed against equity can end up underwater when a job changes or a household splits. In Madison County that can mean a quick plan matters to the owner, who may be a few months from a foreclosure sale. Review our guide on how foreclosure auctions work to see the deadline they face.

Lead sources

Where to find short sale leads in Alabama

• Pre-foreclosure lists. Owners behind on payments are the main source. Read our pre-foreclosure guide.
• Newspaper legal notices. Alabama foreclosure notices run once a week for three weeks in the county newspaper.
• Agents and attorneys. Some refer clients who cannot list. Use motivated seller tactics.
• Direct mail. A calm, short letter works. See direct mail.
• Lis pendens and court records. Check lis pendens filings for related actions.

Your exit

Who buys short sale deals in Alabama

Buyers are mostly patient investors and homebuyers who can wait. They must accept that the lender sets the final price and the timeline. Be honest about that before they sign.

Give buyers proof of funds early and keep them updated. Some lenders ask for a copy of the buyer’s funds and may reject deals that appear to flip the same day. Our double closing and funding guide covers the money side.

Step by step

How to start wholesaling short sale properties in Alabama

1. Meet the seller. Confirm the hardship, loan balance and any foreclosure date.
2. Sign with a lender clause. Make the contract subject to written lender approval.
3. Disclose in writing. Tell the seller you may assign, and tell the buyer you hold only a contract.
4. Send the package. Give the lender hardship papers, offer and proof of funds. Use our repair cost guide for your estimate.
5. Run the numbers. Check your offer with the ARV calculator and MAO calculator.
6. Track the file. Follow up often and watch the sale date.
7. Close with approval. Use an investor-friendly title company and confirm the lender approval letter.

A Huntsville couple bought near the peak and later lost one income. They fell behind and saw a notice in the newspaper. They told you they needed an option other than foreclosure.

You signed a contract that was subject to the lender’s written approval and sent the hardship letter, offer and proof of funds. The lender asked for a broker opinion, and the file sat for weeks while you kept the seller informed.

Eleven weeks later the lender accepted $252,000 and agreed to release the balance in writing. You assigned the deal for $8,000 to an investor, and the sale closed before the foreclosure date. Compare numbers with our comps guide.

Alabama rules to know

Foreclosure timing and short sale rules

Alabama generally allows non-judicial foreclosure under a power of sale. Notice of sale is published once a week for three successive weeks under 35-10-13, and the sale is held at the courthouse door. The pace can be quick, so keep the lender and seller close. Statutory redemption rights may also apply after a foreclosure sale, but check the current statute for details.

Ala. Code 8-42-2 asks for written disclosures when assigning an interest in single-family property, with possible misdemeanor and civil penalties. A lender may add its own rules on assignment fees. Get the lender’s approval and any deficiency release in writing, and see our deficiency judgment guide and attorney guide.

Learn it with a mentor

Handle the lender with confidence

Short sales reward patience and paperwork. Mentorship students share their files with us, and we help them spot gaps before the lender does.

FAQ

Short Sale Properties in Alabama: common questions

Keep going

More Alabama wholesaling guides

Read the full Alabama wholesaling guide or pick another situation below.

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